Nonbank auto lenders may no longer be governed by CFPB

The Consumer Financial Protection Bureau has proposed changing its definition of larger participants in the auto finance market, potentially removing some nonbank auto finance companies from its supervision. The CFPB filed a proposal with the Office of Management and Budget (OMB) on July 14 to revise a rule titled “Defining Larger Participants of the Automobile Financing Market.” The rule went into effect on June 30, 2015, and gave the bureau authority under the Dodd-Frank Act over auto finance companies and auto lenders, such as captives, that are not traditional depository institutions like banks and credit unions. The proposal The proposal, which is in a “prerule” stage, was reviewed by OMB on July 30, according to the OMB. If the rule is changed, non - depository institutions may no longer be defined as “larger participants” of the auto finance market and would not fall under the CFPB’s oversight, Marci Kawski , partner at law firm Husch Blackwell , told Auto Finance News . Her practice focuses on consumer financial services, including auto finance companies, credit unions and online lenders. “If that rule is rescinded, that would mean that there is not carte blanche authority of the CFPB to examine auto finance companies and other auto lenders,” she said. However, the CFPB could still invoke its dormant authority, which allows it to examine nonbank financial institutions that pose a risk to consumers. The move would be a “a big win for folks in the auto lending space,” Leigh Hoffman , partner at law firm Lippes Mathias who also serves as national counsel for an international auto lender , told AFN . For lenders, approval would mean: Less time spent on regulatory issues: less paperwork; and Lower expenses. The move would be a “a big win for folks in the auto lending space.” -- Leigh Hoffman, partner, Lippes Mathias, “There had been a great deal of outcry about the implications of this” rule, which applied to nonbank lenders with at least 10,000 loans originated annually, Hoffman said, emphasizing that those lenders already were required to report to other agencies. Level playing field The larger participant rule is one of several CFPB proposals filed in recent months in line with its shift in priorities toward depository institutions outlined in its April 16 memo to its staff. The memo outlined a new focus on depository institutions and prioritization of deterring tangible harm to consumers. Redefining what constitutes larger participants in the auto finance market could lead to “a big change in the market,” Ann Petros , vice president of policy engagement and credit union operations at Washington, D.C.-based advocacy group America’s Credit Unions , told AFN . While the revision has not yet been finalized, ACU is hoping for a level playing field regardless if nonbank entities are no longer under CFPB supervisory authority. “Whether a consumer is getting their auto financing from a credit union or bank, a nonbank entity or the dealer, those rules and that oversight should be the same,” Petros said. “That's what protects consumers the best, and that establishes a fair and level playing field for all other parties involved, like credit unions.” Wave of changes Some regulatory changes previously announced by the CFPB in the first half of the year include the withdrawal in May of more than 60 regulatory documents related to consumer protection laws , including the Equal Credit Opportunity Act and the Truth in Lending Act. Additionally, the CFPB withdrew from several cases, including one against Credit Acceptance Corp. in April for alleged predatory practices against borrowers in New York. That case had been filed in 2023 alongside the New York Attorney General’s Office. Regardless of shifts made by the CFPB, lenders “will always have to comply with state law ,” Lippes Mathias’ Hoffman said. “If you're going to lend nationally, you have to come into compliance with the most restrictive [laws] and then decide whether you're going to implement those only on a statewide basis or whether you're going to raise your lending practices to meet the highest level of statewide scrutiny,” she said. Richard Corthell , chief compliance officer at BMW Financial Services , and Robert Engilman , senior vice president and chief compliance officer at Westlake Financial , will join Auto Finance Summit 2025 on Friday, Oct. 17, for a panel discussion on the evolving compliance landscape. View the full event agenda . Auto Finance Summit, the premier industry event for auto lending and leasing, returns Oct. 15-17 at the Bellagio Las Vegas. Learn more about the 2025 event and take advantage of the Aug. 29 early-bird registration here .

Nonbank auto lenders may no longer be governed by CFPB

Bureau moved last month to redefine larger participants in auto

American Honda launches insurance subsidiary

Ford Pro sales rise, GM fleet sales fall in Q2

Related Posts

Trump nominates a new CFPB head, but Vought isn’t going anywhere

CFPB funding in jeopardy following DOJ decision

CFPB change to nonbank oversight could affect securitizations

Ford Pro sales rise, GM fleet sales fall in Q2

Stay Informed with Our Newsletters

The Roadmap Podcast

SPONSORED

Driving Innovation in Automotive Refunds: How Onbe and Allied Solutions Are Modernizing the Payment Experience

Navigating the Margin Squeeze: EVs, Tariffs & Pricing — A Q&A with Earnix

Enhancing credit approaches to boost conversion and dealer loyalty

Welcome Back!

Retrieve your password